Abstract

This study investigates whether take-up of microinsurance has
crowding-out effects on solidarity for informal insurance and whether
sentiments that are the fundamental cause of solidarity discourage
take-up of microinsurance. We implement a solidarity game experiment
in rural Cambodia to answer the following questions. Do
experiment subjects who purchase insurance or know that microinsurance
is adopted by other subjects decrease income transfers for
other subjects? Do subjects who know that microinsurance is introduced
and can be adopted by anonymous subjects decrease income
transfers for other subjects? Does microinsurance reduce (increase)
income transfers due to crowding effects, even if it is removed?
Lastly, if solidarity is stronger among group members, are members
less likely to adopt microinsurance? The results surprisingly show
that crowding-in information effects exist, while framing effects
do not. In addition, solidarity has a negative impact on take-up
of microinsurance, and information crowding-in effects disappear
after microinsurance is removed.